European Court of Justice rules against Ireland in Waterford Crystal pensions case
By Finfacts Team
Apr 25, 2013 - 5:36 PM

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The European Court of Justice today ruled in favour of Waterford Crystal workers who took a case against Ireland for the loss of their pensions when the company collapsed.

The court which sits in Luxembourg found that under EU law the State had an obligation to protect the pension entitlements of workers in the event of a company becoming insolvent. The protection is provided in the 2008 Insolvency Directive. It rejected the Government's claim that the State contributory pension should be taken into account in assessing how much of the lost pensions should be made up following the insolvency of Waterford Crystal and its pension fund in 2009. In May of taht year 2009, a request for a State guarantee on a €39m loan was rejected by the Irish Government, while the company had debts in excess of €470m and a significant deficit in its pension fund. Waterford Wedgwood, the parent company, claimed that Government assistance would be akin to the public bailouts of Northern Rock in Britain, Bear Stearns in the US and the rescue in the 1980s of Insurance Corporation of Ireland.

Waterford Crystal employed 3,200 people in Ireland, at its high point in the 1970's.

Glass making in Waterford dates from 1783 and in 1947, Czech immigrant Charles Bacik, grandfather of Irish Senator Ivana Bacik, opened a glass works in the city because of the reputation of the original glassware.

In the early 1950s, the operation was acquired by the Irish Glass Bottle company, which was controlled by the McGrath family who also operated the Irish Sweepstakes.

When a receiver was appointed in July 2009, 1,500 workers were told they would receive only between 18% and 28% of their full pension entitlements.

The court criticised the Government for not fulfilling obligations which were imposed following the judgement in favour of an English woman who brought a similar case against the UK in 2007, before the Insolvency Directive was introduced. On that occasion the court ruled that the woman, Carol Robins, should have received more than 49% of her pension entitlements after a double insolvency - - the bankruptcy of a company and its pension fund.

The judges ruled that offering retirees half of what they had been promised under a defined benefit scheme does not amount to protection by the state. It said the economics situation of Ireland does not constitute "an exceptional situation capable of justifying a lower level of protection of the interests of employees as regards their entitlement to old-age benefits under a supplementary occupational pension scheme.”

The lawyers who represented the Waterford Wedgwood employees in their case welcomed today’s decision by the European Court of Justice that the Irish State has an obligation to protect the pension entitlements of Waterford Wedgwood workers after that company became insolvent.

ByrneWallace represented the Waterford Wedgwood workers in this case.

“This is a case of enormous significance and the outcome represents a very comprehensive victory for the Waterford Wedgwood employees”, said Gary Byrne of Byrne Wallace. “The Court found in their favour on all of the major points that were at issue”.

Byrne referred to the fact that the EU requirement for pension protection has been in place since 1980 and said : “It is regrettable that it was necessary to take this case to the European Court of Justice to achieve the protection to which the Waterford Wedgwood employees are entitled ."

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